Circa and Indian Biocrude Market

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Table of Contents

Introduction
Examining the C6 (Biocrude) Market in India
Entry into the Indian Market
Proposed Business Structure
Marketing Plan and Objective for C6 in India
Reference List

Introduction

The production of biocrude from biomass waste represents a technological breakthrough which theoretically should help facilitate a global initiative away from hydrocarbons towards carbohydrates as a viable source of fuel and other substances for future industries.

It is based on this that companies such as Circa have started initiatives to expand into regions such as Asia where biomass waste is at its highest in order to take help expedite the process of global conversion towards biocrude usage in industrial processes.

This paper explores biocrude production within India, where production would be the most viable and what processes can be utilized in order for Circa to start production of biocrude within the country.

Examining the C6 (Biocrude) Market in India

An examination of the work of Dipul Kalita from the Cellulose, Pulp and Paper Division of the North East Institute of Science and Technology in Assam, India reveals that India actually has a well developed bio-crude research industry with the following plant species considered viable sources for biocrude production: Euphorbiaceae, Apocynaceae, Urticaceae, Convolvulaceae, Camelina sativa, Sapotaceae, Aleurites moluccana and Pedilanthus tithymaloides (Agarwal, Pant, & Ahmed, 2010: 1194).

Unfortunately, as stated by Agoramoorthy, Hsu, Chaudhary & Shieh, there are actually few substantial reports investigating the production and utilization of hydrocarbon-producing plants in India (Subbarao, 1999: 35) (Agoramoorthy, Hsu, Chaudhary & Shieh, 2009: 118 -121).

The primary reason behind this is due to the fact that India has yet to achieve a substantial level of large scale hydrocarbon plant production as well as sufficient standardization of conversion processes necessary to turn them into biocrude (Kalita, 2010: 36 – 47) (Research, 2011: 4).

It must be noted though that while Biocrude has a relatively small market within India due to the factors mentioned this is not to say that alternative means of renewable fuel resources don’t exist.

There are a variety of companies currently within India that specialize in the production of a variety of biofuels and certain types of biocrude and as such Circa could gain entry into the local market utilizing the companies that make these fuels (Venkataraman, 2008: 1) (Advanced biofuel to meet over 50% of India’s demand for transport gasoline by 2020, 2011: 65).

Of particular interest is the Mysore based (a province in India) Labland Biotechs which for the past 10 years has specialized in producing bio-crude and bio-fuels for export to international oil companies such as D1 Oils which utilizes the cultivated biocrude and biofuel as mixtures for its own products.

On the other hand it must be noted that Labland Biotechs utilizes a different business model approach to the production of biocrude as compared to Circa.

What Labland does is create contractual obligations with local farmers in the Karnataka region to cultivate Jatropha instead of normal crops due to Jatropha having a considerably higher yield of oils as compared various other plant species.

This is far different to the approach utilized by Circa which converts biomass waste into usable biocrude for processing into other substances. Despite this, Labland Biotech still presents itself as the best choice to sell C6 to and as such should be the target company for Circa once it enters into the Indian market.

Entry into the Indian Market

An examination of various agricultural areas within India reveals that one of the most viable locations for establishing a mobile C6 plant would have to the Tharr desert located in the northwestern part of India. The reason why this particular area is a viable location is due to the fact that it is one of the most heavily populated desert areas in the world with agriculture being one of the largest local industries.

It is interesting to note that due to relatively arid nature of the Tharr desert nearly 33% of all planted crops fail after the rainy season is over within the region. This represents hundreds of tons of food crops which are merely thrown away and as such presents itself as a viable biomass for the production of biocrude.

Introducing several mobile Circo plants into the local region would ensure that the failed crops won’t be merely thrown away but turned into a reusable resource which is the basis of the Circo business model. Furthermore the mobile plants can also be used to process the left over stalks and husks after the processing of various local crops such as bajra, pulses and jowar.

Based on the examination of Kalita regarding processing costs for raw materials for biocrude within India it was seen in his study that 1 kilogram of biocrude produced from a biomass originating from local plant sources is priced as 24.6 to 24.2 Rupees (local Indian currency) (Kalita, 2010: 36 – 47).

With $1 being equivalent to 49 Rupees this is indicative of a rather affordable and cost effective means of production when taking into consideration the overall cost per kilogram of biomass used. On the other hand it must be noted that the regular rainy season which affects the Tharr region is a cause for concern when storing the mobile factories near the area.

As such it is recommended that the factories remain in place during the dry season and stored in 12,000 square foot factory in Shamshabad Hyderabad which has been estimated to cost roughly 50,000 Rupees per month.

With the rainy season lasting only for a few months it is recommended that Circa merely rent instead of buy any warehouse to be used for storage since it will not be used on all months of the year.

Since the mobile plants will be placed in the Tharr Desert access to the local power grid is not an option, as such the use of a gasoline powered generator should suffice with a daily cost of roughly $250 due to the price of gas in India reach $7.50.

Proposed Business Structure

With the current price of 1 kilogram of biomass to be used for production priced at 24 Rupees per kilogram the overall price per ton for processed biofuel will be $4,535 at $5 per kilogram. This takes into account the overall cost of chemicals utilized, the price of gas, and various miscellaneous fees that come up during the production process.

What must be understood is that India has positioned itself as one of the largest manufacturing centers in the world today; unfortunately this distinction has come at the cost of significant levels of environmental degradation and pollution.

Marketing C6 in India presents various manufacturers with the ability to conform with ethical manufacturing processes that take corporate social responsibility and sustainable resource management into consideration thus helping to repair the damage to India’s local ecology (Modis, 2009: 12 – 15) (Khaliq, 1995: 36).

On the other hand it must be noted that even Circa admits that the conversion of biocrude into usable substances does come at a substantial cost in the short to medium during the initial stages of equipment conversion.

When taking into consideration the fact that India prides itself on low cost manufacturing the marketing of C6 as a higher priced alternative to present day substances used may not affect the market in the way the company desires (Mambully & Rajasekaran, 2009: 350 – 357).

Marketing Plan and Objective for C6 in India

Overall the marketing plan of Circa in India should concentrate in establishing business to business sales with local companies that specialize in both the conversion and export of biofuels and biocrude. The recommended company to start this sort of agreement out with should be Labland Biotechs which specializes in biofuel and biocrude export albeit utilizing Jatropha as the primary source of their product line.

The objective of the company is to help local farmers in the Tharr Desert during the dry season in finding an effective use for the 33% crop die off biomass that accumulates as a direct result of the regions local climate. By buying the dried products this benefits the farmers since it allows them to make money of an otherwise useless product.

This also benefits Circa since the dried crops act as an excellent biomass source for biocrude conversion. All in all India presents itself as viable market for entry and as such should be explored as option for Circa’s product expansion.

Reference List

‘Advanced biofuel to meet over 50% of India’s demand for transport gasoline by 2020’ 2011, Chemical Business, 25, 6, p. 65, MasterFILE Premier, EBSCOhost.

Agarwal, A., Pant, T., & Ahmed, Z. 2010, ‘Camelina sativa: a new crop with biofuel potential introduced in India’, Current Science (00113891), 99, 9, p. 1194, Science Reference Center, EBSCOhost.

Agoramoorthy, G., Hsu, M., Chaudhary, S., & Shieh, P. 2009, ‘Can biofuel crops alleviate tribal poverty in India’s drylands?’, Applied Energy, 86, pp. S118-S124, Academic Search Premier, EBSCOhost.

Kalita, D. 2010,’Potentiality of hydrocarbon yielding plants for future energy and chemicals’, Desert Plants Biology and Biotechnology, p. 36 – 47.

Khaliq, R. 1995, ‘India: A growing market for environmental technologies’, Business America, 116, 7, p. 36, MasterFILE Premier, EBSCOhost.

Mambully, G. & Rajasekaran, S. 2009, ‘Biofuels: opportunities and challenges in India’, In Vitro Cellular & Developmental Biology Plant, 45, 3, pp. 350-371, Academic Search Premier, EBSCOhost.

Modis, T. 2009, ‘Where Has the Energy Picture Gone Wrong?: Under Pressure Society Explores Forlorn Directions Such as Bio-fuels, Windmill Farms, and Hybrid Cars’, World Future Review, 1, 3, pp. 12-21, Academic Search Premier, EBSCOhost.

Researchand, M 0004, ‘Research and Markets: An Essential 2011 Report Analyzing the Biofuel Industry in India’, Business Wire (English), 4, Regional Business News, EBSCOhost.

Subbarao, E. C. 1999, ‘Chemical research in next fifty years*’, Chemical Business, 13, 3, p. 35, MasterFILE Premier, EBSCOhost.

Venkataraman, N. S. 2008, ‘Let the country go full blast on jatropha biofuel’, Chemical Business, June, MasterFILE Premier, EBSCOhost.

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